Creating shared
value through
partnership
Ministerial statement on
engaging the private sector
in aid and development
“There is global consensus that
a more engaged private sector
is essential to driving sustainable
economic growth and reducing
poverty in developing countries.”
In June 2014 I launched Australia’s
new aid policy which recognised
the private sector as the primary
source of economic growth,
incomes and jobs in developing
countries. For the first time
Australia had an aid policy which
clearly identified the private
sector as an essential partner to
achieving sustainable development
outcomes in our region.
The response to the new policy
has been extremely encouraging,
from businesses, partner
governments and our traditional
development partners. This is
evidenced by the diversity and
quality of submissions to the Joint
Standing Committee on Foreign
Affairs, Defence and Trade on their
inquiry into ‘The role of the private
sector in promoting economic
growth and reducing poverty
in the Indo-Pacific region’. The
Inquiry’s report, Partnering for the
Greater Good, will help guide the
Australian Government’s efforts to
mainstream engagement with the
private sector across the entire aid
program.
This Statement outlines the
Australian Government’s vision
for engaging the private sector
in aid and development. The
Statement acknowledges that
the private sector has the means
and increasingly the motivation
to contribute to development
outcomes as part of their core
business. It invites the private
sector to collaborate with the
aid program on implementing
sustainable solutions that tackle
development challenges whilst
delivering commercial returns.
We look forward to bringing
together the best of government,
business and civil society from
Australia and partner countries to
drive sustainable economic growth
and reduce poverty in our region.
Julie Bishop
Minister for Foreign Affairs
Contents
01
02
purpose
The changing role of
business in development
03
04
Our vision
What does increased private
sector engagement mean to us?
05
06
Our value proposition
Our investment priorities
07
08
Australia’s aid program in the Foreign
Affairs and Trade portfolio
How we can work together
10
11
Engagement principles
Interested in working with us?
13
14
Shared value — International Development
examples in practice
Key definitions
15
Key websites and references
purpose
This is the Australian government’s invitation to
the private sector to collaborate with us and build
sustainable solutions that tackle development
challenges in our region whilst delivering
commercial returns.
With the private sector in developing
countries providing on average
60 per cent of GDP, 80 per cent of
capital flows and 90 per cent of jobs,
we are looking to partner with the
private sector to amplify the impact
of Australia’s aid investments while
01
generating business growth.
We recognise that a strong and
vibrant private sector is essential
to help countries move from
relationships based on aid to ones
based on economic partnerships.
The changing role of
business in development
Despite some remarkable increases in prosperity
and general living standards over the last two
decades, poverty and disadvantage remain complex
challenges in many parts of the world.
Government and non-government
organisations (NGOs) cannot address
these challenges in isolation. We
must reimagine how we approach our
development work and who we work
with. At the core of this is the private
sector.
Harnessing the power of business to
drive prosperity and reduce poverty
has never been more necessary or
more possible than it is right now.
Businesses are active in shaping
the new global United Nations
Sustainable Development Goals, and
as a result we are witnessing the
rapid emergence of sustainability
as a global priority for business.
The objectives, interests and values
between aid and business have
reached a landmark intersection.
The objectives, interests
and values between
aid and business have
reached a landmark
intersection.
02
oUR Vision
The concept of shared value forms the
foundation of our vision — that business can
deliver sustainable social impact in developing
countries while achieving commercial returns.
The Australian Government’s desire
to support the growing alignment
between business and development
is based on the recognition that the
private sector will play an essential role
in meeting the social and economic
development challenges in our region.
The concept of shared value1 forms
the foundation of our vision — that
businesses can deliver sustainable
social impact in developing countries
while achieving commercial returns.
Finding new and creative ways to
increase collaboration and partnering
between government, the private
sector and NGOs will be critical to
realising this vision.
Our deep knowledge of developing
country contexts and emerging
market opportunities effectively
positions us to support businesses
to realise the considerable shared
value to be gained for all stakeholders
from actively pursuing a social impact
agenda. Creating commercially
sustainable solutions to poverty
will continue to be an essential
component of a country’s successful
transition from relationships based
on aid to ones based on economic
partnerships, and to the creation of
lasting prosperity.
Australia’s development policy2
provides a clear framework with
which to pursue this vision. Aid
expenditure will become more
innovative and catalytic, leveraging
all the important drivers for economic
1 Creating Shared Value by Michael Porter and Mark R. Kramer, January 2011 Harvard Business Review.
2 Australian aid: promoting prosperity, reducing poverty, enhancing stability.
3 Making Performance Count: Enhancing the accountability and effectiveness of Australian aid.
03
and social development with a new
and necessary focus on private sector
engagement.
There is a specific requirement that
‘All new investments will explore
innovative ways to promote private
sector growth or engage the private
sector in achieving development
outcomes’.3 In practice this means:
• Increased engagement with the
private sector across the full range
of our work.
• Increased focus on growing the
private sector in the countries we
work in.
While acknowledging that this is a
long-term vision, it is one to which we
are committed.
What does increased
private sector Engagement
mean to us?
Increasing our private sector
engagement is not so much about
what we do (which is more the focus
of our private sector development4
work) but how we do it.
creativity and expertise to achieve
mutually beneficial outcomes that
satisfy Australia’s development
objectives as well as business
objectives.
We know the private sector has
a wealth of knowledge, ideas,
capabilities and resources that can
help improve the effectiveness of
Australia’s aid program. Working
together will enable us to leverage
each other’s assets, connections,
Experience demonstrates that NGOs,
philanthropic foundations, social
enterprises, industry peak bodies,
universities, other government
agencies, state-owned enterprises,
international development banks,
the United Nations and host country
governments will all be key to our
collaboration with the private sector.
These partners often have resources
and rich knowledge-assets not
available in public or for-profit
businesses, making them valuable
partners. Globally, businesses are
seeking to access the specific
capabilities of these groups to
support their social impact and
sustainability work.
We define the private sector as including Australian, global and local commercial enterprises (businesses)
ranging from those in the informal sector to large multinational corporations.
We recognise that across the spectrum of private sector organisations (from small businesses to large
multinationals) each will have different requirements and make different contributions to our level of engagement.
Working together will enable us to leverage
each other’s assets, connections, creativity
and expertise to achieve mutually beneficial
outcomes that satisfy Australia’s development
objectives as well as business objectives.
4 Private sector development is used to describe Australia’s aid investments that support the private sector in the countries in which
we work to contribute to economic growth and poverty reduction.
04
Our value proposition
The Australian Government has a
network of around 100 overseas
posts, along with Department of
Foreign Affairs and Trade (DFAT)
staff located in Canberra, state and
territory offices, whose responsibilities
include oversight of Australia’s aid
program.
The aid program works to solve
complex development challenges in
the frontier and emerging markets
of our region, promoting Australia’s
national interests by contributing to
sustainable economic growth and
poverty reduction across the following
investment priorities:
businesses looking to increase their
commercial returns while improving
their social impact.
Deep knowledge of the business,
political and regulatory
environment in the developing
countries where Australia’s aid
program operates
• Agriculture, fisheries and water
Our knowledge of developing country
contexts and emerging market
opportunities can provide insights to
business on accessing new markets
or workforce opportunities; reducing
or managing country-specific risks;
developing or accessing new supply
chain and distribution systems; and
improving community relations.
• Building resilience: humanitarian
assistance, disaster risk reduction
and social protection
Support in creating a
more attractive business
operating environment
• Education and health
Many of our policy reforms and
investments are specifically related
to improving the investment
environment in the countries we work
in. For example, investing in transport
infrastructure, health, education,
governance, access to finance
and improving women’s economic
empowerment directly helps to
reduce business risk, complexity and
regulatory uncertainty. Increased
private sector engagement on the
planning and delivery of these types
of activities can help us provide more
effective and relevant aid. It can also
provide information on business
and investments for better decision
making.
• Effective governance: policies,
institutions and functioning
economies
• Gender equality and empowering
women and girls, and
• Infrastructure, trade facilitation and
international competitiveness.
We offer businesses:
The ability to convene, broker
and influence
We have considerable convening
power, credibility and extensive
networks, which can assist
05
Catalytic funding
In addition to our work on building
a better business operating
environment, we have the capability
to provide catalytic funding to
encourage and support businesses
looking to increase commercial
and social returns in line with our
investment priorities.
Our investment priorities
We offer business
Investment priorities
Business Offers us
The aid program invests
across these priority areas:
The ability to
convene, broker
and influence
Deep knowledge
of the business,
political and
regulatory
environment
in developing
countries
Support in
creating a
more attractive
business
operating
environment
Catalytic
funding
Agriculture, fisheries and water
Building resilience: humanitarian
assistance, disaster risk reduction
and social protection
Knowledge
Ideas
Education and health
Effective governance: policies,
institutions and functioning economies
Capabilities
Resources
Gender equality and empowering
women and girls
Infrastructure, trade facilitation and
international competitiveness
06
Australia’s aid program
in the Foreign Affairs and
Trade portfolio
The aid program is a core part of the foreign affairs and
trade portfolio playing an essential role in economic
development, including promoting and supporting
Australian business investment in the region. The aid
program is unique in the portfolio in that its focus is
on growing the private sector in our partner countries.
Australian business will be an important partner in these
efforts, in addition to local and international businesses.
The aid program is integral to advancing Australia’s
economic diplomacy agenda5 and is a key pillar of the
portfolio’s work to liberalise trade, support global growth,
promote investment and advance Australian business
interests overseas.
The aid program is managed by DFAT, with growing links
to other parts of the portfolio including Austrade, EFIC and
ACIAR.
Department of Foreign Affairs and Trade (DFAT)
Advances Australia’s national interest through managing its foreign,
trade and investment interests, and delivering an effective aid
program
Australian Trade Commission (Austrade)
Advances Australia’s international trade, investment, education and
tourism interests by providing information, advice and services
Export Finance & Insurance Corporation (EFIC)
An export credit agency partnering with banks to provide financial
solutions for Australian businesses
AUSTRALIAN CENTRE FOR INTERNATIONAL
AGRICULTURAL RESEARCH (ACIAR)
Commissions research that leads to more productive and
sustainable agriculture through collaborative projects involving
Australia and developing country partners
5 DFAT’s economic diplomacy agenda can be found at http://dfat.gov.au/trade/economic-diplomacy/Pages/economic-diplomacy.aspx
07
How we can
work together
We employ two main modes of engaging with the private sector:
Collaborating and Partnering.
Private
sector
Opportunity
DFAT
Collaborating
Collaborating is a way for us to actively explore
opportunities to address development challenges and
achieve corporate aspirations together. Much of what
we offer — convening, brokering, influencing — involves
collaboration with governments, NGOs and businesses
both globally and locally. This includes: through global
platforms such as the United Nations system, G20, APEC
and various trading initiatives; engaging with NGOs
through peak bodies both in-country and in Australia, such
as the Australian Council for International Development;
and collaborating with businesses through various
business councils and with respective chambers of
commerce in-country.
There are many ways we can collaborate with business on
ideas, areas of mutual interest, opportunities and networks
— from exploratory conversations to regular meetings.
Collaborating is characterised by lower levels of formality,
obligation and risk.
Other
partners
Current examples of how we collaborate with the private
sector include:
• Through our support to the Global Compact Network
Australia (GCNA) to help promote its mandate and
grow its Australian membership base. This brings more
businesses into a network of organisations with shared
beliefs that align with our interest in reducing poverty
in the region. The GCNA is the Australian, business-led
network of the United Nations Global Compact, the
world’s largest corporate sustainability initiative, through
which businesses commit to ten universal principles in
the areas of human rights, labour rights, environmental
standards and corruption prevention, and to support
societal goals such as sustainable development.
• Through our support to the Business Coalition
for Women (BCFW) which represents a group of
companies and corporate leaders who are working
together to drive positive change for women
and businesses in Papua New Guinea. BCFW
08
is enabling 50 like-minded PNG businesses to:
improve opportunities for women to move into senior
management positions and onto company boards
through leadership training and mentoring programs;
better equip company workplaces to deal with the
consequences of family and sexual violence; promote
gender-smart workplaces; and develop opportunities
for women entrepreneurs in their supply and distribution
networks. BCFW includes: Westpac, Oil Search,
ExxonMobil, National Catering Services, Deloitte,
PricewaterhouseCoopers, Digicel, Steamships Trading
Company, South Pacific Brewery, and Nationwide
Microbank.
Partnering
We have a long history of partnering with NGOs, other
governments and multilateral organisations. We are now
extending this partnering capability to include the private
sector.
Partnering is characterised by a more formal relationship
between the parties and generally includes higher
levels of structure and obligation. There is a range of
existing ways to partner with us and additional partnering
mechanisms are under consideration. Current partnering
methods include memorandums of understanding,
funding (or co-funding) facilities, or cost and risk-sharing
arrangements. We work with business to determine the
most appropriate approach in each case.
Current examples of how we partner with the private
sector include:
• The Westpac Corporate Partnership, which aims to
improve the livelihoods of men and women in the Pacific.
The partnership aims to increase economic activity in
Papua New Guinea and Fiji by increasing access to
finance and supporting private sector development.
A key element of the partnership is to deliver greater
economic opportunities for women through the rollout
of financial services (mobile phone and branchless
09
banking), and through women’s economic empowerment
including improving access to loans for small and
medium enterprises owned by women.
• Product Development Partnerships (PDPs) with
Medicines for Malaria Venture, Foundation for
Innovative New Diagnostics and the Global Alliance
for TB Drug Development. PDPs are innovative publicprivate partnerships co-investing in the development of
new drugs and diagnostic tests for use in developing
countries. A pooled funding mechanism enables
Australia to co-invest with other donors, global health
organisations, private philanthropic organisations and
pharmaceutical companies to help bring to market
diagnostic tools and medicines for tuberculosis and
malaria.
• The Market Development Facility (MDF) stimulates
investment, business innovation and regulatory reform
to create jobs and increase incomes for people in
our region. In Fiji, for example, one MDF intervention
involved the supply of agricultural lime to reduce farm
soil acidity. By diversifying into supplying agricultural
lime, a local concrete mining company reduced the
cost of lime to smallholders across the country, as well
as creating new business opportunities in Fiji.
Partnerships are subject to due diligence, however we also
recognise the need to be practical, responsive and agile
when engaging with the private sector. To achieve this
we continually review our processes to ensure they are
pragmatic and outcomes focused.
Keys to success
While collaborating and partnering are not necessarily
sequential, experience suggests that partnerships often
develop from earlier collaborations. Collaborations enable
mutual sharing of objectives, priorities and capabilities,
which can provide the foundations for a strong
partnership. This is why we are aiming to increase our
collaborative work as a priority.
Engagement
principles
Our engagement with the private sector will be underpinned by the following core principles:
Complementary priorities
Engagement will be built on
complementary priorities. For us, that
means our engagements will focus on
advancing our aid investment priorities
(at a country, regional or global level).
Building value
Engagement will deliver greater results
than would otherwise be achieved without
the collaboration.
Return on investment
Our joint efforts need to deliver outcomes
greater or proportional to the time and
resources invested.
Open and transparent
Engagement will be conducted in an open
and transparent manner.6
Commitment to
Responsible Business
All parties should have a demonstrated
commitment to responsible business7 and
have a clear social impact agenda as part
of core business.
6 As a commonwealth agency, DFAT complies with the Commonwealth Procurement Rules.
7 ‘Responsible business’ is a commitment to behave ethically and contribute to sustainable economic, social and environmental
outcomes. Our commitment to gender equality and women’s economic empowerment underpins all aid investments, including those
with the private sector.
10
Interested in
working with us?
Evaluating our impact
Evaluating and measuring the impact
of our investments is an important
part of ensuring we are achieving our
joint objectives.
Measuring social impact is important
to many businesses. We will avoid
duplication and look to leverage your
existing impact reporting. We strongly
endorse the Global Reporting
Initiative and the United Nations
Global Compact and would consider
reporting to either entity as a robust
contribution to our due diligence. If
there are gaps, we will work with you
to develop and agree on the right
reporting measures specific to our
partnerships.
How to contact us
To find out if your business interests
align with our investment priorities, we
suggest you start by reviewing where
we give aid8 and our development
priorities9. If there is an alignment of
interest, the next step is to contact
the relevant Embassy or High
Commission if you are outside of
Australia, or DFAT’s state and territory
offices within Australia10.
For further information contact our
Private Sector Development Team at
[email protected]
8 http://dfat.gov.au/aid/where-we-give-aid/Pages/where-we-give-aid.aspx
9 http://dfat.gov.au/aid/topics/investment-priorities/Pages/investment-priorities.aspx
10Contact details are located on the DFAT website
http://dfat.gov.au/about-us/our-locations/missions/Pages/our-embassies-and-consulates-overseas.aspx
11
The private sector will play an essential role
in meeting the social and economic
development challenges in our region.
12
Shared value —
International Development
examples in practice
Health and education — Hindustan Unilever Limited
Hindustan Unilever (HU) has created a direct-tohome distribution system run by underprivileged
female entrepreneurs in Indian villages of fewer than
2,000 people. This project (‘Project Shakti’) is the
result of a collaborative effort between Unilever, the
Indian government and a network of microfinance
NGOs to educate and empower women to run their
own businesses.
Unilever provides microcredit and training for
entrepreneurs to stock and resell Unilever products
that have been specifically adapted for this market.
There are now more than 45,000 entrepreneurs
covering approximately 100,000 villages across 15
Indian states.
Benefits to the communities include giving rural
female entrepreneurs business skills as well as the
opportunity to substantially increase their household
income while reducing the spread of communicable
diseases through increased access to hygiene
products.
Project Shakti now accounts for 5 per cent of
Unilever’s total revenue in India. It has extended
the company’s business into rural areas previously
considered unreachable, resulting in significant
economic value for the company.
http://www.hul.co.in/sustainable-living-2014/casestudies/
Casecategory/Project-Shakti.aspx
Supply chain improvement and product security — Olam International
Olam International is a leading agribusiness
operating from ‘seed to shelf’ in 65 countries across
the world. It began cotton operations in Ivory Coast
in 2008 following the acquisition of a local ginnery.
National cotton production volumes had dropped
due to the civil war and Africa lagged behind other
cotton growing regions through a combination of
outdated seed varieties, low quality inputs and poor
farming skills.
Olam recognised that improving the productivity
and traceability of Ivory Coast’s cotton market
would stimulate commercial growth and increase
farmers’ incomes. Achieving this would rely on
integrating Olam’s ginning operations into cotton
farming activities in surrounding communities and
thereby managing the entire supply chain from seed
13
distribution to collection of seed cotton.
A strategy was developed to address all touchpoints in farming communities that affected
productivity.
Since inception, Olam has increased its smallholder
network from 3,000 to 16,000 farmers. By the
season 2011/2012 yields had nearly doubled to
1,126kg/ha and farmer annual revenues had also
risen from US$200 to US$1,200 per family. Olam
was also able to secure its cotton supply, increase
product quality and strengthen its supply chain.
http://olamgroup.com/sustainability/case-studies/
boosting-cotton-productivity-livelihoods-cote-divoire/
Key definitions
Collaborating
Collaborating is a way for us to actively explore opportunities to address
development challenges and achieve corporate aspirations together. This style
of engagement is characterised by low levels of formality, obligation and risk.
Developing countries
For the purpose of this statement, developing countries refer to countries in
the scope of Australia’s aid program. See the DFAT website ‘Where we give
aid’.
Informal sector
The informal sector refers to businesses in developing countries that operate
outside of the regulatory environment.
Economic Diplomacy
Economic diplomacy uses our international diplomatic assets to advance
Australia’s prosperity and global prosperity.
Mutually beneficial outcomes
Mutually beneficial outcomes achieve both core business objectives and
Australia’s development objectives, which include driving economic growth and
social progress in developing countries and creating pathways out of poverty.
Partnering
Partnering is characterised by a more formal relationship between the parties
and generally includes higher levels of structure and obligation. A partnering
relationship is likely to include a formal agreement (either a memorandum
of understanding or a contract) and may include a funding component (from
either or both participants).
Private sector
For the purposes of this document, the private sector includes Australian,
global and local commercial enterprises (businesses) ranging from those in the
informal sector to large multinational corporations.
Private sector development
Private sector development is used to describe Australia’s aid investments that
support the private sector in the countries in which we work to contribute to
economic growth and poverty reduction.
Private sector engagement
A collaboration between Australia’s aid program, the private sector and other
participants to effectively leverage each other’s assets, connections, creativity
and/or expertise to achieve mutually beneficial outcomes.
Responsible business
The commitment to behave ethically and contribute to achieving sustainable
economic, social and environmental outcomes.
Shared value
Policies and operating practices that enhance the competitiveness of a
company while simultaneously advancing the economic and social conditions
in the communities in which it operates.
Sustainable impact
The creation of lasting impact (including social and environmental impact) that
endures within the community.
14
Key websites
and references
• Australia’s Development Policy — Australian aid: promoting prosperity, reducing poverty, enhancing stability
http://www.dfat.gov.au/about-us/publications/Pages/australian-aid-promoting-prosperity-reducing-poverty-enhancing-stability.aspx
• Making Performance Count: Enhancing the accountability and effectiveness of Australian aid
http://dfat.gov.au/about-us/publications/Pages/making-performance-count-enhancing-the-accountability-and-effectiveness-of-australian-aid.aspx)
• Where We Give Aid (Country Listing)
http://www.dfat.gov.au/aid/where-we-give-aid/Pages/where-we-give-aid.aspx
• Australia’s development priorities
http://www.dfat.gov.au/aid/topics/investment-priorities/Pages/investment-priorities.aspx
• Australia’s Economic Diplomacy
http://dfat.gov.au/trade/economic-diplomacy/Pages/economic-diplomacy.aspx
• DFAT Trade and Investment
http://www.dfat.gov.au/trade/Pages/trade-and-investment.aspx
• Australian Trade Commission (Austrade)
http://www.austrade.gov.au/About-Austrade
• Export Finance & Insurance Corporation (EFIC)
http://www.efic.gov.au/about-efic/
• Australian Centre for International Agricultural Research
http://aciar.gov.au/aboutus
• Commonwealth Procurement Rules
http://www.finance.gov.au/procurement/procurement-policy-and-guidance/commonwealth-procurement-rules/
• B Corporation Australia
http://bcorporation.com.au/
• ‘Creating Shared Value’ by Michael Porter and Mark R. Kramer
https://hbr.org/2011/01/the-big-idea-creating-shared-value
• Global Compact Network Australia
http://www.unglobalcompact.org.au/
• Global Reporting Initiative
https://www.globalreporting.org/Pages/default.aspx
• Partnering for the Greater Good report
http://www.aph.gov.au/Parliamentary_Business/Committees/Joint/Foreign_Affairs_Defence_and_Trade/Indo-Pacfic_Economic_Growth/Report
• Shared Value Initiative
http://sharedvalue.org/
• Shared Value Project
http://sharedvalue.org.au/
• United Nations Sustainable Development Goals
https://sustainabledevelopment.un.org/topics/sustainabledevelopmentgoals
• United Nations Global Compact (UNGC)
https://www.unglobalcompact.org
• Women’s Empowerment Principles (UN Women & UNGC)
http://weprinciples.org/
15
Contact
Inquiries about this document should be directed to:
Department of Foreign Affairs and Trade
RG Casey Building
John McEwen Crescent
Barton ACT 0221 Australia
Phone: +61 2 6261 1111
Fax: +61 2 6261 1385
Web: www.dfat.gov.au
Twitter: @dfat
Published by the Department of Foreign Affairs and Trade, August 2015
Cover image: Port construction in Dili, Timor Leste. (Lorrie Graham/DFAT)
Pages 1-2: Street sellers selling vegetables on the streets of Kathmandu, Nepal. (Bartosz Hadyniak/Getty Images).
Pages 11-12: Paul Denny works at a copra production centre on Malekula Island, Vanuatu. (Connor Ashleigh/DFAT)
With the exception of the Commonwealth Coat of Arms and where otherwise noted all material presented in this document is provided
under a Creative Commons Attribution 3.0 Australia (http://creativecommons.org/licenses/by/3.0/au/) licence. The details of the relevant
licence conditions are available on the Creative Commons website (accessible using the links provided) as is the full legal code for the
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The document should be attributed as: Commonwealth of Australia, DFAT, Creating shared value through partnership: Ministerial
statement on engaging the private sector in aid and development, August 2015.
ISBN 978-1-74322-241-6 (printed)
ISBN 978-1-74322-9 (online)